KBC Group: Second-quarter result of 925 million euros

• Net interest income increased by 1% quarter-on-quarter and fell by 2% year-on-year. The net interest margin for the quarter under review amounted to 2.10%, up 2 basis points on the previous quarter and down 1 basis point on the year-earlier quarter. Loan volumes were up 2% quarter-on-quarter and 4% year-on-year. Deposits excluding debt certificates were up 2% quarter-on-quarter and stable year-on-year. Volume growth figures were calculated on an organic basis (excluding changes in the scope of consolidation and forex effects).

• The insurance service result (insurance revenues before reinsurance - insurance service expenses before reinsurance + net result from reinsurance contracts held) amounted to 113 million euros (compared to 134 million euros and 121 million euros in the previous and year-earlier quarters, respectively) and breaks down into 76 million euros for non-life insurance and 37 million euros for life insurance. The non-life insurance combined ratio for the first six months of 2024 amounted to 87%, the same level as for full-year 2023. Non-life insurance sales increased by 8% year-on-year, while life insurance sales were down 19% and 15% on the high levels recorded in the previous and year-earlier quarters, respectively, caused mainly by lower sales of unit-linked life insurance products.

• Net fee and commission income was up 1% and 7% on its level in the previous and year-earlier quarters, respectively. Fees for both our asset management activities and our banking services were up 2% quarter-on-quarter. Year-on-year, fees for our asset management activities increased by 11% and fees for our banking activities by 2%.

• Trading & fair value income and insurance finance income and expense was up 58 million euros on the figure for the previous quarter and down 30 million euros on the level recorded in the year-earlier quarter. Net other income was in line with its normal run rate. Dividend income was up on the previous quarter’s level, as the se ond quarter traditionally includes the bulk of dividend income for the full year.

• Operating expenses excluding bank and insurance taxes were up 1% on their level in the previous quarter and down 2% on their year-earlier level. The cost/income ratio for the first six months of 2024 came to 46%, compared to 49% for full-year 2023. In that calculation, certain non-operating items have been excluded and bank and insurance taxes spread evenly throughout the year. Excluding all bank and insurance taxes, the cost/income ratio for the first six months of 2024 amounted to 42%, compared to 43% for full-year 2023.

• The quarter under review included a 72-million-euro net loan loss impairment charge, as compared to a net charge of 16 million euros in the previous quarter and a net release of 23 million euros in the year-earlier quarter. The credit cost ratio for the first six months of 2024 amounted to 0.09%, compared to 0.00% for full-year 2023. Impairment on assets other than loans amounted to 13 million euros in the quarter under review, compared to 0 million euros in the previous quarter and 31 million euros in the year-earlier quarter.

• Our liquidity position remained strong, with an LCR of 160% and NSFR of 139%. Our capital base remained robust, with a fully loaded common equity ratio of 15.1%.

See full press release in attachment

Johan Thijs, Chief Executive Officer KBC Group:

We recorded a net profit of 925 million euros in the second quarter of 2024. Compared to the result for the previous quarter, our total income benefited from several factors, including higher levels of net interest income, higher net fee and commission income, solid insurance revenues and better trading & fair value income, as well as the seasonal peak in dividend income. Costs were down significantly, since the bulk of the bank and insurance taxes for the full year is always recorded in the first quarter of the year. Disregarding bank and insurance taxes, costs edged up by 1% quarter-on-quarter. Loan loss impairment charges were up on the very modest level recorded in the previous quarter, resulting in – what is still – a very low credit cost ratio of 9 basis points in the first half of 2024.

Consequently, when adding up the results for the first and second quarters, our net profit for the first half of 2024 amounted to 1 431 million euros. At first sight, this is much lower than the result for the year-earlier period, but that period had benefited from a positive 0.4-billion-euro one-off gain on the sale of the Irish loan and deposit books. Excluding that one-off gain, our half-yearly profit was in line with the year-earlier figure.

Our loan portfolio continued to expand, increasing by 2% quarter-on-quarter and by 4% year-on-year, with growth being recorded in each of the group’s core countries. Customer deposits were up 2% quarter-on-quarter and were stable year-onyear. The share of bank and insurance products sold digitally continued to rise: based on a selection of core products, around 55% of our banking and 27% of insurance products were sold through a digital channel, up from 50% and 24% a year ago. Of paramount importance in our digitalisation journey is our personal digital assistant Kate, which we continuously develop further with the aim of ensuring maximum convenience for and support of our customers. To date, around 4.8 million customers have already used Kate, an increase of approximately 40% on the year-earlier figure.

Our solvency position remained strong, with a fully loaded common equity ratio of 15.1% at the end of June 2024. The solvency ratio for KBC Insurance under the Solvency II framework amounted to 200%. Our liquidity position remained very solid too, as illustrated by an LCR of 160% and NSFR of 139%.

To summarise, our overall performance in the first half of 2024 was excellent yet again.

As regards our share buyback programme, which started in August 2023 and ended on July 31st, 2024, we have bought back a total of approximately 21 million shares for a total consideration of 1.3 billion euros. In line with our general dividend policy, we will pay an interim dividend of 1 euro per share in November 2024 as an advance on the total dividend for financial year 2024. Furthermore, we also decided to increase our guidance for net interest income for full-year 2024 to 5.5 billion euros ballpark figure, up from our initial guidance of 5.3 to 5.5 billion euros.

I’d like to take this opportunity to sincerely thank all our employees for their contribution to our group’s continued success.

I also wish to thank all our customers, shareholders and all other stakeholders for their trust and support, and to assure them that we remain committed to being the reference in bank-insurance and innovation in all our home markets.’

video statement www.kbc.com

*This news item contains information that is subject to the transparency regulations for listed companies.